Page 4 - Policy Economic Report - June 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Executive Summary

According to World Bank’s latest Global Economic Prospects report, the global economy is expected to
stabilize for the first time in three years in 2024. The global growth is projected to hold steady at 2.6% in
2024 before edging up to an average of 2.7% in 2025-26. The growth is still below the 3.1% average in the
decade before COVID-19.

In advanced economies, growth is set to remain steady at 1.5% in 2024 before rising to 1.7% in 2025.
Growth in the United States strengthened to 2.5 % last year, owing primarily to robust consumption,
government spending, and significantly reduced imports of goods and services. While the developing
economies are projected to grow 4% on average over 2024-25, slightly slower than in 2023, growth in
low-income economies is expected to accelerate to 5% in 2024 from 3.8% in 2023.

In case of India, National Statistical Office (NSO), Ministry of Statistics and Programme Implementation
(MoSPI) released the Provisional Estimates of Annual Gross Domestic Product (GDP) for the Financial Year
2023-24 and Quarterly Estimates of GDP for the Fourth quarter (January-March) of 2023-24 on 31st May,
2024. Real GDP has been estimated to grow by 8.2% in FY 2023-24 as compared to the growth rate of
7.0% in FY 2022-23. Real GVA has grown by 7.2% in 2023-24 over 6.7% in 2022-23. This GVA growth has
been mainly due to significant growth of 9.9% in Manufacturing sector in 2023-24 over -2.2% in 2022-23
and growth of 7.1% in 2023-24 over 1.9% in 2022-23 for Mining & Quarrying sector. Real GDP in Q4 of
2023-24 is estimated at ?47.24 lakh crore, against ?43.84 lakh crore in Q4 of 2022-23, showing a growth
rate of 7.8%. According to data released by Ministry of Statistics & Programme Implementation, the year-
on-year inflation rate based on all India Consumer Price Index (CPI) is 4.75% (Provisional) for the month
of May, 2024. The retail inflation eased to a 12-month low of 4.75 per cent on an annual basis in May as
against 11-month low of 4.83 per cent in the previous month. The food inflation rate in May eased to 8.62
per cent from 8.75 per cent in April. However, it has remained higher than the 3.3 per cent registered in
May 2023. The number has remained within the Reserve Bank of India's (RBI) tolerance band of 2-6 per
cent. Assuming a normal monsoon next year, CPI inflation for 2024-25 is projected at 4.5 % with Q1 at 5.0
%; Q2 at 4.0 %; Q3 at 4.6 %; and Q4 at 4.7 %. The MPC has decided to keep the policy repo rate unchanged
at 6.50 %.

According to the latest data available from the Centre for Monitoring Indian Economy (CMIE),
unemployment rate in India saw a significant drop in May 2024 to 7 per cent, which was its lowest
recorded since September 2022. In April 2024, the unemployment rate was at a much higher 8.1 per cent.

As far as oil and gas industry is concerned, Brent crude futures continued to slide in May and early June,
as flagging oil demand growth and inventory builds pointed to a comfortably supplied market. Brent
futures fell by $6/bbl in May, before tumbling further in early June after the OPEC+ alliance announced
plans to gradually unwind last year’s extra voluntary output cuts starting in 4Q24.

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